Law, blockchain, cryptocurrency

Law Decoded: Bringing blockchain into securities markets, Feb. 12–19

Laws regarding blockchain and cryptocurrencies are far behind the times due to the latter's newness. However, some laws are being written to try to catch up.  

The development will not be easy due to the international scope of blockchain and cryptocurrencies. The privacy of cryptocurrencies has made them attractive to criminal activity, but the above article has little to say about that. However, most of the rapid growth of cryptocurrencies has not been due to criminals.  The use of cryptocurrency as money and for investing has also gotten the attention of monetary authorities such as the U.S. Federal Reserve System.

A Fed[eral Reserve] president predicts the Bitcoin boom won’t last. Really? There is little risk of that prediction being wrong. There is far more risk of being wrong by predicting a big bust will be very soon.

Bitcoin’s Rise Should Make Regulators Ask if the Fed’s Policies Have a Hand in It: WaPo

"While calling the Fed justified for trying to boost the pandemic-afflicted economy by encouraging investors to put their funds in job-creating activities instead of parking it in banks or government bonds, the lack of investment opportunities has driven many to chase yield via 'speculative vehicles - bitcoin very much included', the newspaper said." (WaPo).

Heh. The Fed people want control. The Fed people or the WaPo editors -- maybe not intended -- call investing in government bonds, which supports more government spending, a non-job-creating activity!😉 It is surely the opposite of what they so often say.

'All rise' for Clarence Thomas

Clarence Thomas regrets ruling that Ajit Pai used to kill net neutrality

Supreme Court Justice Clarence Thomas now says he was wrong on the Brand X case that helped the FCC deregulate broadband. Justice Thomas wrote the majority opinion on Brand X in 2005.

I am far from qualified to opine on the legal issues and technicalities, but I honor Judge Thomas for what he did. Also, it is clear the matter bears significantly on the meaning of terms and the nature of government. In the Brand X case the Supreme Court faced the question of whether broadband was classified as an information service or telecommunications. The Court's decision didn't choose one and exclude the other, but allowed both.

A brief search for examples of information service gave cable modem and text messaging.  Telecommunication includes communications by radio, television, wire, satellite, and cable. For anybody interested Wikipedia has pages on the FCC and net neutrality in the USA.

The Brand X case has allowed the FCC to subsequently change its classification decision multiple times. The FCC is an independent agency of the United States government. This means that "while constitutionally managed by the executive branch, are independent of presidential control, usually because the president's power to dismiss the agency head or a member is limited" (Wikipedia). Judge Thomas regrets that the precedent of Brand X granted too much power to an independent agency and too little power to judges to decide how the law should be interpreted for a particular court case.

"Thomas explained his new position over 11 pages, but it boils down to one fact: he now believes that Brand X disrupted the government's checks-and-balances system by preventing courts from blocking federal-agency decisions that conflict with US law. Judges, not officials at government agencies, are responsible for interpreting the laws issued by Congress, he noted."

Nuanced Censorship #2

This post is an offshoot from yesterday's. The Ayn Rand Institute’s (ARI) digital publication New Ideal has an article about free speech and regulation featuring John Stossel and ARI’s chairman Yaron Brook. It includes a video of Mark Zuckerberg of Facebook testifying before Congress that he is willing to work with regulators for what he regards as rightful regulation. Brook and Stossel Scrutinize Facebook’s Regulatory Bid.

Stossel appears before Brook and argues that Facebook is only trying to use regulations to erect a protective wall against competitors, a frequent argument made against government regulation by free markets advocates. Then Brook argues instead that Facebook is acting in self-defense, to protect itself against government meddling and/or control. Finally, Stossel begrudgingly accepts Brook's argument, according to the author of the article.

I agree more with Brook's argument, since his is stronger and better tied to the relevant facts at hand. However, we differ some on the reasons for self-defense.

A business such as Facebook may face two fronts -- competitors and government. Stossel focuses on the first and Brook the second. Zuckerberg welcomes government regulation if he can shape it to (1) legally support Facebook’s own practices or desires, and (2) make it easier for Facebook to comply with future regulation. He doesn't express any desire about wanting to make compliance more difficult for Facebook's competitors. He may have this desire in the back of his mind to thwart competition like Stossel says, but thwarting competition is not mentioned in the video with Zuckerberg.

I agree with Brook's idea that Zuckerberg is trying to defend himself or Facebook from government controls. However, Brook and I differ at least some on the kind of controls. He uses Microsoft as an example to explain why it's self-defense. However, in Microsoft's case, the government's concern was monopoly. There might be some concern about monopoly in Facebook's case, but it is not mentioned in the video with Zuckerberg. Instead his concern is bad regulation -- bad in his view. He welcomes government regulation about censoring content that users put on Facebook as long as the regulation is shaped to suit Facebook. Using the new terms I introduced in my previous post, Zuckerberg is comfortable with turning Facebook's quasi-censorship or extra-legal censorship into legal censorship. Opposing bad regulation is a form of self-defense. On the other hand, Zuckerberg wanting "good regulation" --  good in his view -- is a form of offense.

Nuanced Censorship

Two typical dictionary definitions of "censorship" are:

1. The process of removing parts of books, movies, letters, etc. that are considered inappropriate for moral, religious, or political reasons.

2. The practice of limiting access to information, ideas or books in order to prevent knowledge or freedom of thought.

Both leave open who is the censor – a government, religious authorities or other.

In contrast, Ayn Rand asserted that “censorship” pertains only to government being the censor (link).

Whether you agree with the dictionaries or Rand, it would be helpful to have two terms to distinguish who the censor is in this era of “hate speech” and actions by Facebook, Google, and YouTube. “Censorship” could refer to censorship by a government. “Quasi-censorship” could refer to censorship by a non-government entity such as Facebook, Google, or YouTube.

The distinction is still not as clear as it may seem at first. Suppose:

- the government passes a law specifying what sort of content can be legally censored by Facebook et al

- Facebook et al heavily, successfully influences the legislative details such that the details are much like what Facebook would do anyway on its own.

Hence, the legislation is authored in effect by government and other entities, crossing the presumed boundary between “censorship” and “quasi-censorship.” But at least it affords a boundary between legal/illegal and extra-legal (not a matter of law). That leads to a different distinction. “Censorship” could refer to censorship by a government. “Extra-legal censorship” could refer to censorship by a non-government entity.